Let me see if I understand this....

1.) If a Realtor knows of a leak, but the Home Inspection doesn't catch it, it's the Home Inspector's fault??

2.) If a Realtor knows of a title defect, but the Title Company misses it in the search, it's the Title Company's fault?

3.) If the sub-flooring in the bathroom has dry rot...and termites have eaten half the house...and IF the Realtor knew about it, but the Termite Company came back with a clear report, it's exclusively the Termite Company's fault? By the way...I can sense the rebuttal, so let me say that the Realtor DID know because it was on the previous termite inspection report...and it was the Realtor who removed the original inspection tag.

4.) And if the Realtor knows her buyers are being approved for a loan when they absolutely shouldn't be, but allows the deal to close anyway....it's exclusively the mortgage company's fault???

I guess I'll simply never understand the logic.

We can preach all day that we had nothing to do with the crisis that faces our industry today. We can lay blame on the lending industry for their greed...and their carelessness in providing financing with no money down, horrible credit and allowing stated income.

But we established rapports with our customers. We knew Mr. Buyer was a cashier at the local grocery store...and Mrs. Buyer worked at Walmart. We were smart enough to realize that their annual incomes at best were about $50,000 combined. We knew they had four kids because they brought them to every showing. And we knew they both drove brand new cars because we saw them. We also knew that, under the circumstances, they probably couldn't afford to buy a $499,900 home. BUT...if we got a lender to approve it (which we usually did)...we could make $15,000 AND have a future scapegoat!!! How cool is that??

My kids use these same excuses (i.e. "She made me do it!") to absolve themselves of responsibility, but for us to do it seems downright shameful.

Dave

P.S. I know the above examples do not apply to every agent...so PLEASE don't go there. But I also know it happened enough times by the "less than professionals" in all associated industries to bring this new world of real estate upon us. If you were one of the ones who maintained your integrity throughout....there is no need to defend yourself. I applaud you...and have the utmost respect.  But for the others?? Grrrrrrrrr!!!

All good points; I've actually said "no" to one of my first deals about 2 years ago, and the Real Estate agent (working with Contract-for-Deed) told me to "do whatever it takes to get her qualified."  Being a newbie in the field at that time, I did whatever it took.  She still did not qualify.  I said "No" again, and he went to a more experienced mortgage broker.  That mortgage broker said yes, then said no and for her to wait 3 months, and then he would say yes.  Well, she is still stuck in the 'contract for deed' home, 2 years later.

With that said, a person should have a prequalification letter from a mortgage broker - preferably a LICENSED BROKER since they have to follow more guidelines and laws than just a banker - prior to looking at a home or submitting an offer for a home.  It should fall onto the mortgage broker or loan officer at that point.  But, even a prequalification letter does not guarantee a loan will be approved - especially with all of the changes we see day-to-day.

We are all on the same side, and as long as we keep the consumer's rights in mind, we will do well!

Lenn-

As a mortgage professional I can say that I could not agree with you more.  The media like to always lump loan officers, bans, appraisers, title company and real estate agents into on collective pool and I do think that is unfair to real estate agents.  In fact, most of the shadiest deals that I have heard about involved FSBO transactions, not properties listed with agents.

Also, you have a very high percentage of mortgages involving cash out refinances and Home Equity loans - where does a realtor get involved with that?

While there may have been a handful of realtors involved in fraudulent activities here and there, I doubt if you removed everyone of those transactions, that we could even come close to avoiding the situation we are in.

Luke Allison, Flagstar Bank

Lenn,  Thank you for laying it out so beautifully.  It absolutely frosts me when I hear newscasters include realtors in the mix of those guilty for this problem.  I always give my buyers 3 or 4 lenders and let them choose the lender and program they are comfortable with.  It annoys me when I hear agents speak about "their lender" - that si not serving the client and it is also "steering".  I do blame us for some of the incompetent agents we've let loose on the public.  Karen

Dave Daniels--I applaud your post. We are supposed to be professionals and a discussion is healthy. I am a Mortgage Loan Officer  amazed by the consumer demands of access to financing and if we did not provide it then they would go to the TV /cable advertized lenders to get money.

We  avoided adjustable rate loans as they seldom made sense. The credit Unions and Banks do not and are not required to provide the same disclosures as brokers. For the most part Mortgage Brokers follow the guidelines and are limited as to what is allowed by the lenders....boy has this changed in the last 6 months...excesses of the past are no more.

That aside..I respect the role of the realtor in guiding the client to our services. The selection of a provider for financing can be based on more than what the bank or others "give to the agent" in the course of doing business...IE: awards dinner contributions to the Local MLS, affiliate membership in local MLS, Golf tournaments, lunches etc... These donations are acceptable to state licensing bodies but the client seldom is aware of the relationships.

If the relatonships are driven primarily by the level of competency and competitive pricing the buyer would be better served and the referals for future business would grow. The partnership to the contract to buy is driven by the details and in the future challenging times a few thousand dollars more in the buyers pocket can make or break the deal. So it does matter what the cost of a loan is for the buyer, and support the seller to only enter escrow with a buyer that can perform to contract.

So please select and work with Mortgage Finance sources who are competitive, treat your clients like family and take the time to fully understand the buyers financial profile and the affordabilty issue will be fully addressed. The lending world as we know it has already changed so a discussion about the excesses is not serving the future needs of ourselves or our limited market of buyers.

We need to look forward and work to reassure the borrower /buyer that we all certainly care about what for most is the largest financial decision for their familes and future.

Regards,

Michael Z.

Aren't we way passed the blame game?????It is greed plain and simple and it is on the backs of everyone in this industry one way or another, small or big.....Move on time....you have industry veterans left on the Realtor and Mortgage side...it is time to bond as Professionals and help each other out thru this tumultous time...It is simply a housing correction....mortgage correction....we have been thru close to this before...I agree on a much stronger note now but we will prevail...Relationship Building is the term of the next 2 years I think and if these relationships get strong they will not be tarnished WHEN not if it comes back....Don;t look back, there is nothing we can do now, Look Forward and with a Positive Note...grab your friends in the industry, prop them up and help each other out....WE CAN MAKE IT!!!!!

I am amazed at the higher than thou attitudes of the real estate agants on this blog. All of sudden, nobody understood the programs except for the demonic mortgage guy. Everyone was a victim.

The programs were absolutely rediculous and everyone knew that but everyone was  more than happy to take advantage of it and cash the checks. The loan officers you refer to did not create the programs or products that they sold, they sold what products they had available to them.

The real estate agents that are pointing fingers today are the same realtors that would cut off the referrals to their lending partners the minute someone couldn't get financing. Always having someone in the wings.

Real Estate Agents, the blame falls squarely on Washington and Wall Street so put away your claws.

I found this and a lot of the comments made to be excellent. As a mortgage professional who has been in the business since 1989 I have seen the best and worse of both sides of the aisle. Thats why in 2004 I decided it was time to teach all my customers the loan process and why we do the things we do and ask for the things we ask for, I allow them to talk to the loan officer, processor and me the manager on any aspect of this business. We even encourage them as well as the Realtors we have relationships with to attend any of our meetings.

They are instructed how to read the rate sheet and help choose their pricing. Why do this? It's time we in all parts of this business begin to really apply the words customer service. How can you say you service someone who truly does not understand what you're doing. We have a website that they can go to for questions and information or links to information to insure they understand the options available.

We also connect them and the realtors by email for instant status updates and document requests so that everyone is always on the same page. My customers come back because they trust me not because they need me. When in my opinion more people adopt the informing and instructing your customers then I think everyone agents etc will jhave much smoother if not more effective and efficient transactions.

When you point the finger at someone remember there are three fingers pointing back at you.

The agent isn't to blame for the mortgage mess.  The guidlines were way too loose.  The institutions that set the guidlines are to blame, and they are the ones taking the losses now.  Even the loan officers, for the most part, were just following the guidelines.  The guidlines have changed, and once we find a bottom, the real estate market will settle back into a more normal pattern of slow appreciation.  The loans will be good and profitable again for the banks, and the loan officers and real estate agents who survive the crisis will be better off for it.

Wow, so many comments and so few by loan officers...I'm surprised we're sitting this one out.  So, I'll come to the defense of my fellow brethren...at least to some extent.  I will NOT defend those loan officers who knowingly wrote fraudulent loans, however, the mortgage crisis or mortgage meltdown was not caused by fraudulent loans.  It was caused by irresponsible lending practices, however legitimate at the time.  Do I feel like I bear some of the responsibility?  Actually, yes.  Do I feel that Real Estate Agents bear responsibility as well?  Not in the least, I dont see how you could effect the mortgage transaction.  You do put pressure on us to get loans through for your clients on occasion...but it's part of your job to oversee the entire transaction, right? 

So, who's too blame?  Not that it makes any difference now, but you have to go back a lot farther on the food chain then the loan officer.  If Wall Street says they will buy loans for people with questionable credit and no money in the bank for zero down payment, then lenders are going to start offering those loans.  When the lender offers them, knowing that they will be able to sell them off, then we as loan officers start offering them to our client, your clients as well, I might add.  And by being able to offer those loans, we felt like we were performing a service, both to you and to the buyer, by being able to approve loans and offer home ownership options to those formerly unable to qualify.  And while hindsight may be 20/20, there was no ill intent by any party.  And the blame game at this point is as petty as it is useless. 

Anyway, I'm sure I could go on and on but the fact is...I love Real Estate agents, most of you anyway, and I know that this has effected you almost as it has effected us.  Fear not, you are absolved of blame as far as me, and most loan officers I know.  Good luck too us all moving forward.

Chad McDowell, Fidelity Financial Group

Oh PLEASE!!  I'm a broker in 3 states and used to be a RE branch manager. 

We have to take our share of the blame along with everyone else.  If you were using a loan officer that was denying loans to your buyers - that you took to other loan officer that got them closed, how many more buyers did you send your buyers to the honorable loan officer?

Many RE agents stick their heads in the sand (or other places) don't qualify their buyers themselves, just send them out to get pre-approved/qualified by a  loan originator - who armed with stated income/assessts and low/no doc loans just put down on the app what it took to get qualified and the loans went through. 

AT THE TIME, buyers didn't care because they got their house, sellers didn't care because they got their money, agents didn't care as they too got their money. 

Now the market tuned, AS IT ALWAYS DOES, and we Americans are never at fault.  So buyers blame everyone, realtors-loan officers-underwriters, lenders, lenders blame investors, and investors blame buyers and around we go.  And the originator of this thread blames someone else.  This isn't the first time for this - remember the S&L crisis?  Stupid lending practices, same outcome.

It doesn't matter who is at fault, it doesn't really matter how we got here (other than trying to learn from past mistakes) - the fact is we are here and now we need first to cope and then to fix and get past it.  And that will happen.  Yes there will be pain, there will be a MASSIVE reduction in paper wealth, but it will seek and find equilibrium.

And for a bit of good news, I saw last week that housing starts were at their lowest level in 17 years  -  YIPPEE.  The market is adjusting, excess inventory will have a chance to be absorbed and along we roll.

This may be one of the most irresponsible blogs/articles I've read in sometime?  To point the proverbial finger at any one distinct reason for the current situation is ridiculous.  We are in an extremely complex financial and credit downturn, the magnitude that has never been seen before in our country's history.  This type of finger pointing rhetoric only feeds the fire so to speak.

Furthermore your comment, "In all the years I've been selling real estate, I've never known a loan officer who couldn't say "NO"." is comical as well.  Did we forget who got paid upwards of 6% commission on all the "approvals" mortgage companies doled out.  That's right the Realtor.  And in all the years I've been helping people buy homes I can't remember any Realtor asking me, "Are you sure they can afford this home?" or "let me sell this home a little cheaper so they can afford it".

Shame on you and all the so called "professionals" that agree with you!

BRAVO Lenn.  I agree whole heartedly and it is nice to see someone clear the name of real estate agents.  I have never approved a loan while I have been a REALTOR, I have never determined who qualifies for how much.  All I can do is educate buyers to do their research and check more than one funding source.

At this point, what is done is done.  I'd like to see what we can do in the future to make sure this doesn't happen to this extreme again.

Kathy Fowler
HomeSellers Real Estate, LLC
Enid, OK
www.EnidHomeSellers.com
Kathy@EnidHomeSellers.com

Good article but unfortunately a number of real estate agents directed a number of buyers to mortgage brokers and banks that offered unrealistic mortgage programs.  Good or bad, real estate people will be thrown into the mix as being part of the problem.

JD.

I couldn't agree with this article more.  However, it is a requirement for agents, at least in Alabama, to provide buyer's and seller's with a net sheet (in other words, a good faith estimate).  I am adamantly opposed to this because it is the lenders responsibility to provide the net sheet.  As agents, we have no idea of what the terms of their loan are.  Furthermore, since we are not privy to the consumer's credit report, how in the world can we provide a net sheet when we don't know what interest rate their credit scrores warrants?

When completing a net sheet, I explain to my buyers and sellers that agents are forced to prepare this document even though we have no knowledge of the terms of their loan.  I advise them that they should rely on the GFE given to them by their loan officer or the HUD-1 provided by the lender.

The net sheet provided by the agent is a constant source of confusion, particularly when a buyer or seller is having resmorse and needs an excuse to back out of the deal.

I'll probably be sorry for this but here goes:

As an appraiser, I have a slightly different take on things.  In the hierarchy of responsibility for the whole housing meltdown crisis, real estate agents (some, anyway) certainly do bear some responsibility --- as do (some) appraisers.  However, from what I've seen, we're at the very bottom of the blame totem pole.  Ahead of us most prominently are mortgage brokers, lenders' AEs, the lenders themselves, Wall Street, government regulators and Alan Greenspan.

But to pretend that real estate agents were pure as the driven snow is ludicrous.  My experience with most mortgage brokers and loan officers was one in which I was expected to "hit the number" and/or ignore and not mention obvious defects of the properties.  When I didn't play the no-ethics ballgame, I was effectively fired.  There was rarely a grand announcement (although, sometimes there was), just a phone and a fax that never rang again with that client's business.  Mortgage brokers experienced the same from many agents.

Now, we can play the game of "You can just say 'No,'" but many mortgage brokers who want to do the right thing know they'll get the same treatment from their agent clients that I got from the MBs --- when we say "No," agents say, "See you later!"  Of course, I know not to indict the whole agent population, but let's get serious here.

It all comes back to "Follow the money."  When commissioned people are allowed to choose the professionals whose decisions directly affect their paychecks, they'll seek out the people they can control.  That's human nature.  Now, I don't know how an honest mortgage broker would answer as to how frequently they are pressured by agents, but as an appraiser, I can tell you that the kind of coercion I described above was the rule, not the exception.  In seven years of appraising and many, many mortgage broker clients, there are two --- 2 ---who let me do my job without any pressure or whining or implied threats.

So, we can say, "Just say no," but we all know that if the service provider says that, many agents will just take their business elsewhere.  However, now that credit is so difficult to secure and most mortgage brokers have disappeared, that practice will become harder and harder.

A couple of anecdotes:

1) I appraised a home last year for a woman who wanted to refi but her lender told her the AVM (automated valuation model) said her home was worth a few tens of thousands of dollars less than she'd paid just two years before (July, 2005).  In this case, the AVM was pretty accurate.  Needless to say, the homeowner was very upset.  She blamed the seller, the seller's agent, the appraiser --- but oddly, not her own buyer's agent (who, by the way, was telling her that the home was still worth in May, 2207 what she paid for it in 2005 --- BS! I thought to myself).  I took a retrospective look at the comps for the period when she bought the home --- for a home that size and age (which are the norm for this part of town), she paid the second highest price from March to October of 2005.  Her home had been nicely renovated prior to sale, but nothing spectacular.  Nothing about her home was outstanding compared to others available.  So here's my question, for the thousands of dollars that the buyer's agent was paid on this deal (easily over $5,000), would it have been too much to expect that she'd run her own CMA?  I mean I was paid much less than 1/10th of that amount and I produced a lot more detail.  I didn't have access to any data that the agent didn't have, yet it was immediately glaringly obvious that the subject property was priced way too high.  I'm sorry, but I think the agent had some responsibility to protect her buyer.  And this was a well known, experienced agent in town.

2) I co-hosted a broker happy hour about a year ago.  I was asked to provide a $50 gift card as a door prize and in return would be introduced and allowed time to speak.  After that, I was personally introduced to an agent described by the main hostess as the Number One, most productive agent she worked with.  First thing out of his mouth when I introduced myself as an appraiser was, "Oh, I have the best appraiser --- hits the number everytime!"  So, there's an appraiser who's obviously not saying no, but can you see that the agent has made it clear that he holds the guy's livelihood in his hands?

No responsibility at all?  C'mon now!

Okay, now with all that said --- I love, love, love real estate agents.  Used to be one.  I just want us all to realize that we can be part of the solution to this horror if we'll acknowledge that there are bad actors in our own professions.  When we pretend otherwise, we give the bad guys cover and continue to let them take food off our tables while they line their own pockets breaking rules that we're trying to follow.

Just sayin'..............

REALLY??? You realy think real estate agents play no part in the demise of the market and in this crucial time in our history??  With all due respect, i think you are mistaken.  As a loan officer, I value my customers and want them to return to me when the time is right.  I have ran across many a real estate agent that will purposely  show my client a home that is priced double what they could afford and when they knew what the clients limit was!!!  This happened more frequently when the stated programs were allowed with no proof at all of income.  I talked most of my clients out of the homes they could not afford.  So you see many realtors are to blame as well for being greedy when they in fact knew a client could not afford a home yet showed it to them anyway hoping to double their commision with total disregard for the clients ability to repay the loan.

when mortgage lenders stopped underwriting their loans they set the ball in motion for everything that is happening to them now.

when wall street bought truckloads of the junk loans they made their own bed.

it didn't take a rocket scientist to see the predictable outcome of the 100% LTV, stated income/stated assets loan for folks who were in fact not self employed.  so YES, there is culpability on the part of agents.  i was witness to dirty deeds done by agents, in collusion with their crooked lapdog loan officer, as the clients were butchered by their agents. 

i can name a dozen names of agents who are directly responsible for ruining their clients financially by encouraging their purchases...there are entire brokerages here in north county that preyed on hispanic buyers.

IT STARTED AT THE TOP TRUE ENOUGH BUT WE AS SO CALLED REALTORS DID HAVE AN OBLIGATION TO QUESTION WHAT WAS GOING ON AS WELL AS STEP BACK AND STEP AWAY FROM MANY OF THE DEALS . ITS NOT A MATTER OF FINGER POINTING . IF THE SHOE FITS TIE IT AND TIE IT TIGHT .  MY BEST FRIEND BOUGHT A HOME THAT WOULD HAVE NETTED ME A VERY BEAUTIFUL COMMISSION BUT BECAUSE I FELT AND BELIEVED SO STRONGLY IN WHAT I PREACHED I WALKED AWAY FROM THE DEAL . I KNEW THAT IT WAS GOING TO END UP IN FORECLOSURE AND GUESS WHAT I WAS RIGHT 100% OF THE TIME WITH EVERY DEAL I WALKED AWAY FROM . MONEY WAS NOT AND IS NOT EVERYTHING TO ME . GOD WILL PROVIDE WHEN YOU DO THE RIGHT THING . AND JUST BECAUSE THE BUYER WANTED TO DO SOMETHING THAT WAS NOT IN THEIR BEST  INTEREST DID NOT MEAN THAT AS REALTOR YOU GO AGAINST THE GRAIN AND STAND BY THEIR SIDE AND WALK WITH THEM THROUGH THE FIRE . IF YOU WERE ONE OF THOSE REALTORS THAT KNEW THAT YOUR CLIENT MAKING $50K A YEAR COULD NOT REALLY AFFORD THAT $$300K MORTGAGE PLEASE TELL ME WHY YOU WROTE THE DEAL UP ANYWAY ? MANY OF MY FELLOW REALTORS HAVE CALLED ME CRAZY BUT THEY ARE STRUGGLING TO MAKE ENDS MEET NOW BECAUSE GUESS WHAT ? IT WAS ALL ABOUT THE MONEY TO THEM AND NOT ABOUT THE PEOPLE THEY WERE SUPPOSED TO PROTECT . YOU SEE SELLING REAL ESTATE IS MORE THAN JUST SELLING REAL ESTATE . YOUR ALSO SELLING YOURSELF. HMMM . THATS SOMETHING TO THINK ABOUT . 

Daniel Guest nailed it right on the head. 

Let's get something straight.  Loan officers DO NOT approve or deny clients a mortgage. If loan officers made the decision, EVERYBODY would get approved.  Loan officers submit a package to an underwriter at a bank who makes the decision.  The underwriter is in a different office, sometimes in a different state and quite often is from another planet. My job is to gather all the information, pay stubs, bank statements, get the appraisal and ship it all off to the bank for review.  The underwriter's job is to comb through the file and look for reasons NOT to approve the loan.  If they approve it, they usually give conditions (things that need further verification) that I have to get and forward on to the underwriter.

What governs the underwriter's decisions?  The investor who has promised to purchse the loan on the secondary market.  You wouldn't get an approval if somebody out there was willing to purchase the loan and its unique circumstances. My job is to find a bank that has a program that fits my client at the best rate possible and get it approved.

What is the Realtor's part?  Clearly, the Realtor doesn't have anything to do with the loan process.  The complicity is more subtle.  How do I get to work with a great Realtor?  They give me a loan that couldn't be done by their "normal" lender...something that  usually needs a miracle to get done.  If I can pull it off, maybe I might get a referral to a better client, depending on how I do.  If I get the loan done, I'm a hero.  If the client goes into foreclosure later, I am a predatory lender.

Or, how about giving you a preapproval  for say, $150k and when we get the contract, it's for $165k and has  HOA dues of $200.  Had that happen quite often.  Now if I don't find a way to go, I'm the heel.  You never remember that when they default a year later. 

"All a mortgage loan officer has to do is say no..."  This just shows lack of knowledge about a lender's capacity.  In fact, it is against the law for me to turn down a loan based on what the application says. If I do, I can be sued for any number of reasons.  The application asks specific questions about race and gender just to make sure my business practices are fair to all applicants. I must submit a loan at an applicant's request to be underwritten even if I am sure his recent parole for bank fraud and the house arrest ankle bracelet with that annoying chirp will probably disqualify him.  I am under the same scrutiny as a landlord taking applications from prospective tenants.  We walk very cautiously through this minefield.

Let's try this.  Suppose I contacted a Realtor about a referred client and said this, "I got this client approved but just barely.  I have doubts about their ability to maintain their payment. I'll leave it up to you to decide whether or not to have me draw the docs..."  Would all the Realtors who would pass this up and say don't close the deal, please raise your hands?  (Long pause).  I didn't think so.

If the programs weren't out there some wouldn't have gotten a loan.  The loan officers acted on the consumers wishes to get them a loan because the consumers thought they could qualify.  Lo and behold they did!  But the reasons behind it are somewhat blurry.  The no doc loans were written on the strength of a credit score and nothing more really.  These loans work for those that have high assets and no job or a pension or cash business, for instance.  I know I didn't want my full financial documentation getting around, it was great for me.  But take a person whom has great credit and they are coerced into buying a property for someone else or multiple cash flowing properties based on the credit alone and no disclosure of what the right hand is doing... well that's a different story.  They didn't know what they were getting into & someone knew exactly what they were doing and we can still call them professionals to this day.

Where I lose track of the investors and lenders responsibility is the industries disconnect in keeping good records.  An example, Title companies could have placed a 30 day hold on title commitments being pulled- this way some of the fraud I've seen couldn't have closed, the same home, on the same day, 7 times over!  Ask any title company employee and I'd have to guess that someone must have noticed multiple pulls and probably said something but as long as it's not against the law, it's legal and was explained away.

Word to the mortgage backed bond investors that are letting short sales go into foreclosure- YOU  GENTLEMEN, could have gotten your money and stopped the rapid depreciation of your own assets by NEGOTIATING for those that were originally qualified to stay in their homes.  Forcing a smaller percentage of homes to go on the market and holding pricing up better for those of us that weren't planning on staying in our homes until the next real estate boom.  But since you understand time value of money so well and not real estate markets or underwriting loan files-I'd have to put in a vote for excerbating the loan crisis as the investors and shooting your own feet in the process whilst the lenders that drew up the contracts for these huge increases in interest rates -sat tied up by their contractual toes helplessly waiting for someone like the government to bail them out.

the old adage- just because your friend jumps off a cliff's edge doesn't mean you have to do it too!  When a deal defies logic, it seems that it's time to reassess the situation and  it's merits and pitfalls.  hum.

PS- the only thing wrong with some professionals is that they didn't know enough to help their clients because their clients didn't know enough to ask for professionals that actually knew about advising them on matters of financing, etc. (that basket includes everybody that sat at the closing table and didn't open their mouths- even though they were making a killing in fees - ie- represent the buyers and sellers interests and advise of potential pitfalls using their previous experience). 

I think older professionals realize the importance of using a seasoned professional- so no wonder professionals got a bad rap across the board. 

Someone trivialized the process of purchasing a home and paid the least qualified representatives to help them. Choosing their new atty., new loan officer/realtor to close their deal for them based on factors like price and likability/friendship not experience and what they brought to the table like past performance and track record.  As usual you may get what you pay for but isn't it better to get an assurance of a better result if you make sure before you pay for it that others have gotten great results too? 

Forgive me for saying it this way but one should choose their financial investment professionals they surround themelves with better than they select their brand of toilet tissue.

Lenn, thanks for opening up this topic, it appears you've hit a nerve. In reading all the posts it's certainly clear that some loan officers clearly do not understand the Real Estate world we live in.

I'm not sure many loan officers realize that Realtors follow a Code of Ethic's and have a license to protect. Simply put loan officers have no cares, just make loans, close the DEAL,make another loan. Make a mistake, get laid off, move on to another company. It wouldn't be that easy if loan officers were registered into a database and licensed just like Realtors. I'm all for regulation on the mortgage industry.

One of the earlier posts from a loan officer read "Did we forget who got paid upwards of 6% commission on all the "approvals" mortgage companies doled out.  That's right the Realtor.  And in all the years I've been helping people buy homes I can't remember any Realtor asking me, "Are you sure they can afford this home?" or "let me sell this home a little cheaper so they can afford it".

I've been selling real estate for decades and as a Realtor we've always requested the purchaser meet with a lender prior to meeting with us. I don't do loans, I sell houses. Even back in 1990, we would request  the buyer sit with the lender and then the lender would fax over the  GFE  andthen and only then we go house hunting based on the information in hand.  Once we did, we would get a lender letter from the loan officer. It's been like that for 17/18 years.And, I can count on one hand the times I got 6% commission. Most Realtors make 3%, that's before the Broker gets thier cut (typically 1/2 of the 3%).I don't know many RICH Realtors, however I do know a whole lot of loan officers who have huge homes, second homes, several cars, mutiple big screen tv's and a huge nest eggs that they've been able to tap and sustain in this downturn.

Good post...

The biggest deals that have been a headache is agents who represent both the loan side and selling side!  Thank you for a great posting!

---Just for the record.  I'd like to introduce you to a lender who has & does say NO.  You said you hadn't met one yet.  :)  I've councelled buyers about the fact that just because you can qualify...doesn't mean you should do it.  I've had happy people accept my councel.  And I've had stressed clients not listen.  But like a number of you said, you can lead a horse to water...

...And to say this is a realtor problem is just silly.  It is the fact that Wall Street stuck in Alt A and Subprime loans and called them Triple A rated bonds.  evil.  And we are all paying the price.

Dani McDonough

The McDonough Group, Seattle  www.danimcd.com   www.TheMcDonoughGroup.com

When a buyer comes to me I explain the loan that will get them approved NOW and the loan that would get them approved LATER once they position themselves to take advantage of a better program. Many buyers choose to buy NOW. The SUBPRIME market got many buyers into a home NOW. I would explain to them what they would need to do in order to get the better loans with a refinance later on. I have been successful in getting many of my clients into a better loan usually within a 2 year period. Those that didn't head my advice are either making the higher payments, selling their homes or worse.

I do not judge potential borrowers. I just inform them of the programs that are available to them. They end up choosing what they want to do. All the cards are placed on the table. Do you want to buy NOW or LATER?

When Realtors referred their clients to me I would let them know if we were going FHA, VA, Conventional or Subprime. They left it up to me to come up with the appropriate program. That is what they should do. Once the borrower is preapproved the Realtor then shows them homes in their price range. The market got crazy with home prices. I know some buyers even waived their home inspection in order to get the home. Was this wrong of Realtors to let this happen? Should buyers ever waive a home inspection?

Let's face it. Some buyers bought homes and perhaps it wasn't the right time for them. I don't blame Realtors for this. I don't blame Mortgage Brokers for this either. Buyers wanted to buy homes and some chose SUBPRIME mortgages to get into the game. None of us could have forecasted how deep the housing market would go. Perhaps we should have anticipated this but we didn't. We continued to sell homes at higher prices and we used all the programs made available to us.

I think it's time to stop crying and start working with buyers who qualify for the loan programs that are still available. Both FHA & VA ofer 100% financing with FULL DOCUMENTATION. FNMA & FHLMC are still in business. Let's continue to educate buyers and show them how to buy a home NOW or LATER. Let them CHOOSE!

It is all of us in the housing industry that are to blame from the consumer to the investor buying the bonds.  The one who gets hurt is the 85 year old couple who were talked into a mutual fund heavily laden with mortgage debt.

The investment banking traders who created these products enticed everyone to the table and we all bought it including real estate agents.  To say that agents have little or no blame is naive and immature to say the least. 

WE are all to blame for this mess so buck up and get over yourselves.  There are opportunities out there for everyone.  The one thing about Americans is that we don't hide and stick our head in the sand when things are tough.  We fight, we believe, we pray. and we make changes!

Remember, it is not all about one individual.

Very well written Buzz, you speak for many lenders.

I don't think that finger pointing is healthy or appropriate within the real estate industry.  I also do not believe that Realtors are responsible in any way for the loan product that is used during a purchase transaction.

With that said, I brokered several flavors of No Doc loans over the last 5 years.  These loans were high risk for buyers who had no other  of qualifying, but still wanted housing.  These were legitimate loans with legitimate guidelines and I am sure as a matter of national statistics, several of them did not work out so well.  By the way, did i mention that I originated many of these No Doc loans for Realtorslooking to acquire more rental property.  That's right,... wholesome real estate agents buying 100% inv properties for themselves. In my mind the depreciation at the end of the housing bubble did far more damage than sub prime or Alt A loans.

Here is another thought question,... which of the following professionals is doing a good job?

1)  A real estate agent (in 2006) who advises their client to list their property for two weeks and not take bids until day 14.  Then take the highest bidder and contact up to 4 appraisers to find someone willing to justify the value at 117% of asking price.

or

2) A loan officer (in 2006) gets a buyer qualified to buy a home at 105% (by paying off a tax lien simultaneously)  after they were turned down at 3 other lenders first.

This is a slippery slope and we should all celebrate our successes together and grieve together in down markets.

Jim    

There is a lot of blame to go around, but that isn't going to fix things.  Hopefully we all have learned a little something out of this cycle.  Hopefully the banks will require something down so that people won't feel the lack of pride and just turn the house over with a no biggie attitude.  Hopefully adjustables will become a thing of the past as that appears to be a lot of the issues I see.  Never-the-less the lack of pride in our country in this is really sad and hopefully we turn around soon.

Good luck to anyone on an current adjustable.  DON'T GIVE UP, work with the bank.  Make your house payment.

Lenn,

I have more than 25 years retail and wholesale mortgage lending experience with major U.S. bank's mortgage divisions, am a Certified Mortgage Banker which is considered an expert in residential real estate lending, hold all mortgage underwriting licences and a SRA residential appraisal license; am a pre-license mortgage teacher and trainer for  realtor, mortgage, bank, and credit union associations; have managed very large mortgage origination operations, am an approved mortgage industry consultant and contractor for several Federal Mortgage Lending Agencies, as well as, Federal bank and mortgage lending regulators, a former employee of the FDIC-RTC, and have held many offices in banking and  mortgage lending over the years.

Mortgage brokers and lenders are prohibited from approving and closing unqualified loan applicants, to do so would be considered lending fraud and they could be fined, lose theirlending licenses, be convicted and serve prison time, be required to repurchase fraud loans, etc. Loan officers do not approve loans, licensed & bonded mortgage underwriters do. The underwriter is required to only approve loans that meets or exceeds the loan "investor's" requirements and make certain they have the loan documentation to prove it. Also, they're held "personally accountable" for the loans that become delinquent, go to foreclosure, etc. Mortgage underwriters can lose their underwriting license, etc. the same as loan officers, the bank, the mortgage company, etc. The 'loan investor's", ie. Fannie Mae, Freddie Mac or "loan insurer's", ie. FHA, VA, USDA and/or Mortgage Insurance companies "all" have loan requirements that the mortgage underwriter must verify/document for loan approval. After the mortgage company/bank/credit union's mortgage underwriter approves and closes the loan, the loan undergoes "loan review" by the bank's, etc. compliance officer, as well as, the "loan investor's" loan compliance officer. If the loan is not qualified or contains fraud, the retail mortgage lender is required toi buy the loan back and may face other penalties, investigations, legal actions, regulatory actions, etc. FYI - There is "computer automated underwriting programs, ie. Fannie's DU & DO, Freddie's LP, and non-prime lender's CDU's, that allow loan officers and underwriters to obtain "Point-of-Sale" loan approvals within 20 minutes or less.

Thus, if the loan is approved by the "Automated Underwriting Programs and/or "manual underwriters" and passes "loan reviews & audits", the loan is acceptable and the mortgage loan officer, mortgage underwriter, mortgage/bank lender, etc. has performed their job correctly.

It's true, the non-prime loan "mortgage investor's" (Wall Street Investment Bankers, ie. BearStearns, Lehman Brothers and/or Fannie & Freddie, etc. created loans which did not require income, assett and/or sometimes job verifications, as well as, allowed very low credit scores and recent, oftentimes, current delinquent credit for loan approval. Did you know that FHA, VA, and USDA have never required Credit Scores for a loan approval? Never! If the government loan applicant has a credit score, it can be as low as a mid-550 and be approved for 97-100% financing along with certain job & income stability requirements. Did you know that FHA allows 97% financing currently while a loan applicant is under a Chapter 13 Bankruptcy or Consumer Credit Counseling Service and these applicants have admitted they can't handle their debt obligations by seeking protection under these repayment plans. To some degree these "mortgage investors or mortgage insurer's" were "pressured" by both the Clinton and Bush Administrations and the US Congress to "increase" home ownership "significantly" because it created a "healthy economy" during the "last recessions". For 5 years after the "Dot Com Bubble Melt Down", new home building, home sales, and home refinancing kept the U.S. economy out of a "deep & long recession". Those mortgage "investors & insurers" responded by creating the ALT A & non-prime mortgages which they were authorized and "encouraged" to do. None of the Federal Lending Agencies nor new laws from Congress "prohibited" them from doing so. Instead, they "encouraged" it. Credit Rating Agencies,ie. Moody's, Standard & Poor, etc. rated these new ALT A & non-prime "mortgage securities" on a par with Fannie Mae, Freddie Mac, and Government loans. Thus, stock market investors bought the securities and for 5-8 years had an "insatiable appetite" for those securities. Nevertheless,it's hard to "measure the risk" of a "new" financial vehicle and it's been verified that Wall Street mortgage investors did not do their mortgage underwriting & fraud QC as they promised and Wall Street Investment Bankers "paid" the "Mortgage Credit Agencies" to "inflate" their "credit ratings" on these ALT A & non-prime mortgages.   

The mortgage lender is required by the HUD Real Estate and Procedures Act to provide the loan applicant a written HUD Closing Costs Booklet, a worst case Good Faith Estimate of costs, a worst case Truth-In-Lending Statement which includes a payment projection for "every year" of their mortgage + all interest charges, a loan program description, a copy of their mortgage note * warranty deed, a copy of their property appraisal, etc. within 3 business days from the date of mortgage application for RESPA docs and prior to closing for all the others. The loan applicant must sign a a final verified application, a final Good Faith Estimate and Truth-In-Lending Statement, Note & Warranty Deed at time of closing. So it's hard to say the loan applicant did not  know the risks in obtaining the type of mortgage they applied for & agreed to accept. All the applicant had to do was "say no", as you mentioned earlier.

The ALT A and non-prime loans are a "lot riskier" than "prime/government loans" and "were" a lot easier and quicker to approve and close because they required "less loan documentation and verifications" but that was allowed and "part of the borrower benefits" for accepting that type of mortgage.  

Thus, who's to blame for the "mortgage mess" - See National Mortgage News.com "The Chain of Blame" and U.S. Congressional testimony of Wall Street Investment Bankers, the Mortgage Credit Rating Agencies, the Secondary Mortgage Market Mortgage Investors, the Mortgage Insurers, the Mortgage Bankers, etc.

1) The Clinton & Bush Administration, the U.S. Congress, Federal Lending Regulators, the   Federal  Reserve, the Federal Bank Regulators, the Mortgage Credit Rating Agencies, the Secondary Mortgage Market, Wall Street Investment Bankers, Mortgage Insurers and Investors, Stock Market Investors, Major Banks for promoting & investing in the ALT A & non-prime mortgage product, the National Association of Realtors & National Home Builders Association for keeping constant pressure on the President's Administrations & Congress to keep "improving & increasing" home affordability mortgage programs" to "less qualified and responsible buyers", lazy & unscrupulous mortgage brokers & lenders who preferred to offer the ALT A & non-prime mortgages vs. the "best mortgage" for the loan applicant to "save time", obtain "faster loan approvals", facilitate quicker loan closings, and earn more "fee income", the individual realtors and home builders that "pressured" the mortgage loan officer, their mortgage company or bank, etc. to "approve" almost "every mortgage" with their "threat" to "cut-them-off" as an "approved lender" for their real estate or home building company if they didn't, etc.

2) The loan applicant becuse all they had to say was "no". They had "all" the "facts" in accordance with the RESPA ACT to make an "informed decision". They chose the "least documentation" and the "quickest" and "easiest" loan approval procedure and "strected" the amount they could borrow and sales price they could afford by selecting the ALT A and non-prime mortgage vs. the "fully docked" conforming loan. They were buying their "dream home" up-front instead of waiting the time required to establish their income, asset, and credit stabilities so they could "truly afford" their homes.

3) Real estate "speculators" and "investors" which could include the "normal buyer" who saw the home prices rising at "double digit appreciation" year after year. They used the ALT A & non-prime mortgages to buy the "most home" they could qualify for because of the "superior investment returns".

Allen Greenspan, the prior Federal Reserve Chairman, warned the public, Congress, etc. of the "Dot Com" and "Housing Bubles" long before they became the "major financial problems" theybecame. No one listened and/or make the corrections necssary "voluntarily". now, "the market" has made "the correction" as Allen warned for eveyrone. There's ~ $1.5 Trillion in a "new series" of ALT A &non-prime mortgages whose ARM mortgage loans are due to re-set 5-7% higher "this Summer".That's expected to create a "new wave" of mortgage delinquencies and home foreclosures. That will create "more housing inventory" which will cause house prices to "depreciate", new higher mortgage credit requiremebnts, more "scared" home buyers, fewer "approved buyers", more Investment Bank failures, more National Bank & Regional Bank failures, more mortgage company failures, morehome builder failures, more consolidation & loss of realtors, etc. Home sales, home building, and home mortgages, etc. will be depressed for  ~ 3 years or longer per Fannie Mae, Freddie Mac, National Economists, the Mortgage Bankers Association of America, the National Home Builders Association, etc. Ultimately, it will be the average tax payer who'll "pay the bill" for this "Housing Bubble" bursting because of the "money being advanced" or "guarantees" being made by the Federal Reserve to "save" Fannie & Freddie, National Banks, and Wall Street Investment Bankers, as well as, the new higher loan limits granted Fannie, Freddie, and Government Loan Agencies, etc. all of which just "postpones" the "day of reckonimng" and the "losses" that will be sustained.

The "big losers" will be the "forclosed home buyer" and the "average tax payer".

Regards.

Randy Long, CMB.

Email: randylon@comcast.net

Lenn,

Great article.  However, you are missing the mark somewhat.  Go up the chain to the top.  Having been a mortgage broker for 17 years prior to becoming a real estate agent, there is a distinct chain of authority when making a loan to a borrower.  The real estate agent has nothing to do with the loan itself or the approval.  And, I have never forced anyone to sign papers at the closing, either.  The borrower's desire to purchase the home starts the process.  The Loan Officer takes the application and collects all the supporting documents.  They in turn hand it over to a processor, who verifies all the information on the application to ensure it is accurate and correct.  The appraisal is ordered.  This is the only time a real estate agent may have an influence on the transaction.  If they can provide adequate comps and convince the appraiser to use them.  However an appraiser will not go out of a comfortable range unless he/she is a crook, no matter what the agent says. Once the package is compiled with all the income, credit, asset and liability verifications, it is sent to the underwriter, who has never met the borrower, nor real estate agent.  They determine if the information meets the lending guidelines, usually that of Fannie Mae, Freddie Mac, HUD, VA or any state agency.  I have talked to many underwriters in my days of mortgage brokering...they are hard to get along with and usually don't take your calls.  But none the less, they usually stick to the current guidelines.  That is their job.  They don't make the guidelines.  Herein lies the critical issue.  If the policies of these guideline makers change, so do the borrowers.  The more lenient the guideline, the more people can borrow, and the more risk involved.  During my 17 years in mortgage banking, I never saw a person get a mortgage with a foreclosure in their record.  It seems they changed that.  I have never seen an interest only loan, other than a private investor crazy loan that no body really wanted.  It seems they changed that.  100% LTV's were extremely hard to come by, if non existent.  It seems they changed that.  Very low short term "teaser" rates were not available.  It seems they changed that.  Balloon mortgages were extremely risky and not promoted.  It seems they changed that.  I have seen the whole gamit of credit reports and many could not qualify back then.  It seems they changed that.  The point here is that the recent policy changes created an increase in risk and wham!  The mortgage industry and government got what they asked for.  They wanted to make more money, they wanted more people to own homes, and they were doing it on sheer volume, they got it!  They opened the dam gate hoping for a bigger lake, but what they got was a flood and now many people are drowning.  The love of money will kill us all, especially if Big Brother ain't watchn' the till.

LENN, I'm amazed this has to be said. This view that real estate agents are responsible for the mortgage mess is really befuddling. Agents are expected to wear many hats. If the home inspector sucks, it's the agent's fault. If the Seller's hidden pivotal facts, it's the agent's fault. And so on. How and when did agents become responsible for other professionals.  Just because we usually tie them all together, we are not responsible for their performance.

why are we looking for fault here...... I don't get it.... I though lenders and realtors were supposed to be on the same page... this article kind of bugs me....

You didn't write this to blame the loan officers for the mortgage mess????? Perhaps you need to go back a reread your post!  Or should someone cut and paste the many variations of  Realtors don't do loans mortgage people do for you?

Fortunately in Canada we do not have this mortgage disaster going on although my heart breaks at hearing about the misfortunes of so many. Canadians and their banks are more conservative.

As a new agent, I learned how to calculate mortgage payments, and the various ratios to see if clients could afford certain amounts of debt. What looks good on paper is not necessarily the truth of life. Even when the numbers look good, often real life interferes and people do not leave room for unexpected events.

I often wonder how well agents really know their clients. Maybe legally they are not responsible for their loan approvals but I would not let my nephew or his friend's friend buy something they could not afford. When I was working as a stock broker, the number one mantra was "KNOW YOUR CLIENT". I think that could apply in many professions.

Hi Everyone,

I have read enough here to just make my stomach turn. Everyone debating on who has the blame. If you really take a look at the MD COS, as agents, we are required to "interpret" all of this garbage that is in the contract! All of that is in this "contract" was written by lawyers!

As agents we either market a home or we help a buyer by showing it, that's all that should be done. Agents nowadays have too many close relationships with : Appraisers, loan officers, title companies, etc.

The buyers should have full responsability to select a real estate lawyer, title company, lender, inspector, etc.

My point is that most "well known" brokers have a title company, a lender they work with, and do business like the crab who is waving on beach saying..."come into my abode, I will take care of everything!"

Our only responsabilities should be:

Buyer signs and intent to purchase along with an agent agreement

Agent forwards these documents to a real estate lawyer

Market or show a home

Be present at inspections and such

Collect on commision and give the buyer or seller a gift at closing!

Let the real estate lawyers and the buyer/ sellers find their own way with interpreting contracts, inspections, negociations, lending etc.

Most real estate brokerages have become a "one stop shop" and this is wrong. Just look at the brochures when you walk into an office.

We as agents did it to ourselves. By providing a convience store for real estate transactions. This is where the blame comes in to play. We should have nothing to do with referring buyers or sellers to anywhere to anyone at anytime for anything!

OMG, I cannot believe this conversation! In what state are real estate agents qualifying their buyers for the lenders? I am now a real estate agent, but I was a mortgage loan processor (not a loan officer) for many years and, in my experience, real estate agents suggest their clients get pre-approved so they don't waste time looking for properties they cannot afford to buy! No, I repeat NO, real estate agent ever got invoved in getting a buyer qualified with the lender. All a realtor provides is the purchase contract, addenda, and other property information that the lender requests.

Apptoving the borrower/buyer is strictly between the mortgage broker/loan officer and the selected lender. This mortgage mess is due to a lot of companies doing a lot of "liars" loans -- no income/no asset (NINA) and stated income/state assets (SISA).

Qualifying someone today on a future estimated 7% loan rate in order to provide a 1% start rate is ridiculous, but someone thought it would guarantee that the lenders would get repeat business in the future. The problem was that people clould not qualify to refinance or didn't know they needed to refinance! Then the "little guys" got into the mess to make a quick dollar and really helped to screw things up. However, in all my time as a loan processor, no realtor ever had anything to do with the contract between the lender and the borrower -- it's called a Promissory Note and the realtor's name does not appear anywhere on it.

Let's also mention that a house price does not have to increase to cover the commissions. That is the seller's choice. Let's remember the points that brokers and lenders charge to provide these wonderful low rates. I never knew a mortgage loan officer who didn't care about his/her commission either! Realtors' commissions are based on final sale price (not necessarily the listed price for all you loan officers who didn't have to pass a state exam) and the points are based on the final loan amount.

Thanks,

Nance Overton, RA, RE/MAX Kauai

I have read about all I can read on this topic that breads great frustraion on everyone in the business right now.  I think that there is enough room to blame alot of people and the jobs that they do, (not limited to but including our politicians).  Good agents and lenders in this business will stick togather and the others will fall off..  After the smoke clears those who stick it out can pick up the pieces and start doing business again!

Good Luck to everyone we all need it right about now.  Pretty soon its not gonna matter anyway most are not egar to run all over town to show property to a buyer who is jerking the chains at $4.00 a gallon.  Qualify your client/customer first and foremost.  If they do not want to speak with a solid lender and want to window shop I am sure there is a Macy's in their neighborhood. 

Best of Luck to all

Lenn:

You've hit a nerve with all Realtor's and Lenders.  I do agree that to generalize all Realtors in that article as part of the credit/housing mess is wrong.  Just as you place the blame on loan officers.  Loan Officers have NO loan authority.  We package the loan as best we can to get the loan approved under the loan guidelines.  Now, are there LO's who are unethical, why sure.  Hopefully they have/are being weeded out, by the Feds under loan fraud or just by Realtors/clients not doing business with them any longer. 

There is a % of all party's involved who were greedy.  There are cases where the agent, LO and Appraiser were all in on the fraud with or with out the buyer.  The banks were greedy, Wall St. was greedy!  But if you think that all the foreclosures are due to LO's...you're wrong.

Keep in mind that artical was written to sell papers/magazines.

Last, I do find your comments and tone for loan officers puzzling.  We LO's and Realtors are/should be a team.    

  I don't think I'd want to be on your team!

I agree with Lenn.   We as agents are not responsible for a buyer that is willing to overextend themselves.  If the mortgage company, whether it is a mortgage broker, direct lender or hard money lender approves a buyer for a certain amount, then that is what that buyer is gonna want to spend.   Another fact is that after you have done your marketing  as a agent you are going to be looking for a return on you investments.  If I have an approved buyer, for whatever amount.   IM GOING TO FIND THEM A HOUSE.  Actually as an agent, we can't afford to not find them a house.  If we do a good job then we get referrals.  If we do a bad job we get nothing but bad publicity.  And not to mention that we have to find it quick.  We all know that buyers are funny.   If we show them to many properties and the don't choose one, we become the agent who isn't showing them what they want. So we have to find them a home.  Even if we don't agree with whether they can afford it that is not our job.  Disclosing the estimated cost of the purchase is.  And I do that all of the time.  And each time the buyer's take a long breath and says OK! we want the property.  And guess what else happens.  If we don't find them a home after all of our efforts the buyer(s) will quite the home search or worst of all go with another agent.   We are people with homes, tuition, kids, pets and bills just like everyone else.  WE ARE SALESPEOPLE.   Its our job to find the property.  Not the money.    

Great post! I hear this quite often, that realtors are responsible for this mess and that they have inflated prices. Does this make us stupid? No, maybe we were taken by the current, the same way is everybody else. And by the way, most of the times I think I deserve 10% for my services, thus I am giving my clients a really good deal at 6% or less.....

There is plenty of blame to go around. Why all the finger pointing? I have seen Real Estate agents pressure lenders saying: "If you don't do this loan, I will take it elsewhere and you won't get my future business." I have seen lenders stretch the rules pretty far. I have seen clients applying for loans they knew was way over their heads. I have seen the lending standards lowered so far by the sub prime investors that they created a huge part of the problem. No one wants to take responsibility but I think everyone shares in the problem we face today.

Ron Lambright
Regional Director
HOPE USA
www.hope4usa.com
ron@hope4usa.com

JC

Are you kidding me, Realtors and Builder Sales Reps accepting NO BLAME.  I am a loan officer and I can not tell you how many times I say NO only to hear the agent say "Well, I'll just call someone else".  If a loan officer says no the agent will simply keep calling and trying every mortgage company in town until they find someone who can get the deal done.  If a loan officer says NO, they are accused of being too conservative.  Let's not forget those Builders and their "preferred lenders".  The consumer is forced to work with a lender not of theit choosing in order to receive closing help, and other incentives frm the Builder.  I suppose you think that the builder's preferred lender is really concerned about what is best for the consumer.  No they are concerned with keeping their referral sources happy.  The entire real estate and lending industry is to blame.  As a realtor did you ever turn a buyer away that you knew couldn't afford the home, with a loan they couldn't afford to pay.  Hell no you didn't, you sold the home and cashed your commission check and referred another unqualified buyer to that snake loan officer.  There's blood on the realtors hand also!  

I think it is a wonderful thing everyone is so worked up over this...but instead of wasting your time placing blame and whining....DO SOMETHING!!!  We as real estate professionals, should be doing everything we can to try and be a solution.  Nothing is gained by sitting back and playing the BLAME GAME.  Check with your local board, join in on the many local "foreclosure fairs" and help the homeowners, banks and yourselves...the market cannot continue like this or we can all only suffer the damages to the economy.  GET UP AND DO SOMETHING-STOP BLAMING!!!!

Amen Wm!  I know many agents who still to this day refer clients to CFC, the company that harmed the industry more than any other.  Realtors do this for one reason and one reason only to get the client a loan at any cost from a LO who will do anything to keep the agent happy.  Realtors seldom walk away from a deal is there is any chance at all they can get paid.  They sell a home to an unqualified, unsuspecting homeowner.  Now market and advertise themselves as "short sale" experts tp the same homeowners.  Talk about wanting you cake and eat it to.  Not to mention, they whine when it takes the back 6 to 8 weeks to respond when the agent is asking the lender to loose 20 to 25% on the mortgage so they can collect their 5% commission from the homeowner who has nothing and is loosing everything.  Not to blame, how with a clear concience can you take 5% from a homeowner who is looing their home in a short sale.  You bet realtors need to accept some blame, not all the blame, not an equal share.  Who invented the escalation clause, it wasn't a mortgage company? Who sold the homeowner an overpriced home in 2004, 2005, 2006 & into 2007? Who called the appraiser to beg for higher value to make the deal work with their better comps? Who told the homeowner to use their lender instead of the one the consumer choose sayingf my lender can get you approved a higher amount?  Still think realtors are not to partially blame? 

Realtors can not be blamed, many are uneducated (unless you count the 60 to 120 hour RE course), unifomed, unprofessional, looking for a big paycheck doing something that requires very little true insight.  Who else can justify being paid such an enormeous commision with so little accountability, other than a Realtor.  Many of todays Realtors got into this business because they could make a lot of money, after all it WAS easy.  Sure taking advantage of people is EASY!  I laugh everytime I hear the commercial from the NAR that says counsult a Realtor because the subscible to a code of ethics.  Code iof ethics must be the name of the bank where they cash the commision checks.  I was asked to do a lot of unethical things when I sold and when I bought my home - by my realtor telling me "Do you want to kill the deal?"  Yes I Blame You!  You shoudl be ashmed of yourself!

Lenn, if you do want to be blamed then the entire real estate industry should dissasociate itself from the mortgage process.  You should simply list and sell the home and nothing more.  You should not refer clients to lenders.  These two processes should be kept at arms length.  Does the car salesman tell the mechanic how to repair the car?  If the homeowner was entirely responsible for seeking out the financing that's is best them for them the market place would take care of itself.  Why do you as a realtor care where the customer gets their mortgage?  The lender does not care in what neighborhood you list and sell real estate.  If you refer out the names of one, two, or even three lenders you are partially to blame for the undue influence you have over the buyer, plain & simple.

Mr. Creel - No I didn't do those types of deals.  I said NO as often as I was able to say Yes, and although I can sellp at noght because my cliest are not loosing their homes I made significantly less money than those LO's who were saying yes.  However for my responsiible lending practices I am known as a very conservative loan officer within the real estate community.  Nice guys really do finish last.  Realtors just want every deal to close and called and continue to call those who will say yes, even if it means practicing fraud.  I found you statement that you never do lender referrals outraegeous. Never, really you've never referred a buyer to a lender, will the deception and lies ever stop?

Michael, You must be one of a kind agent, just perfect in every way, a real diamond in the rough.  In my area suing is not an option when it is a matter of professional behavior and misinformation.  The indsutry shoudl have higher standards with true accountability than allowing the soccer mom to get her real estate license.  Ethical claims in my area are settled by a peer review board, realtors judging realtors, seldom is the agent ever sanctioned due the extensive prcatice and teaching to cover ones ass.  By the way I never said I made a bad buying decision, I said I was asked to do unethical things by my agent!   

Lenn > Great post...

In the last year or so since this "mortgage mess" has unfolded, it has occurred to me that the Realtor should accept some of the blame...not all, by any means, but some of the frenzy to "get the deal done" starts at the Realtor level. Everyone else involved in the sale has their own profit motive to get the deal done. So, while nobody is completely to blame, everyone needs to own up to their part...Including me as the L/O.

Several times during transactions a Realtor as said to me "why can't you get it done? So-and-so across town can"...

Three years ago a very busy Realtor gave me a first time home buyer referral. The borrower claimed he was getting a big bonus just before the close. I got the loan approved with the condition that the borrower show his bonus when he got it. When the borrower got the bonus it was not as big as he expected and they were short money for the down payment. The loan would have to be re-underwritten at a higher LTV (less down payment) and a much higher rate. It would take several days and the close would have to be delayed.

My lender counter offered the borrower with an Alt-A loan for several percent more than the original plain vanilla loan price, but the borrower didn't like the payment. The borrower complained to the Realtor that I could not deliver as promised. The Realtor complained to me that my lenders weren't good enough to get the job done. The Realtor then took the borrower across town to my competitor who promptly put them in a Sub-prime loan with NO verification of income OR assets...

Needless to say, that was the last time the realtor ever sent me a deal. 

The Sub-prime loan was a 2/28 loan that was fixed for two years and then it could adjust... Their loan adjusted last fall to a rate higher than the rate on my lenders Alt-A offer. So now the borrower is paying more on that loan then if they had taken the Alt-A loan I had offered. I now hear that the borrower is in default and will probable lose the home...

With some Realtors there is the implicit pressure of "you are only as good as your last transaction". Is that dishonest? or unfair? Is the pressure to preform in the best interest of the borrower? Could this situation be avoided?

I don't have the answers... All I know is this is not a perfect business, but is the one I chose. So to stay in it, I have to accept that there are many pitfalls along the path. I must acknoledge that when trying to solicit referrals from a Realtor, I have to be ready to walk away from a situation that dosn't pass the smell test. Even if it means losing the commission, the referral, or the Realtor.

Yous can sit here all day and go back and forth about whos to blame. We are all to blame for the mess that is going on. No one has an escape out. From the homeowner who inflates his salary to the loan officer who doesnt do enough background search on the borrower to find out if hes being truthful or not, to the realtor that says I dont care how the deal is done just get it closed put him in a No doc Loan or NINA loan, down to the underwriters that should have been the last stop before the loan was even funded.  EVERYONE is to blame no one gets off the hook.  The problem I see on both ends of the Loan Officer vs the Realtor is neither respects the others profession, or what they have to offer and bring to the table. If you guys did you woudldnt be sitting here arguing over whos fault it is. You would be trying to address ways to stop this from happening again to better serve the customer.

I read with interests the remarks regarding the applicabiltiy of the agent's fiduciary responsibility to their clients.  What is clear is that the typical agent feels a lack of personal responsibility toward their client.  The setiment is something like. "They knew they could not make the payments, so why did they get the loan?" or "They are adults and should have known better."

My daughter just qualified to take her hair dresser's state exam.  She had to obtain 1600 hours of classroom education.  IN order to qualify for for my broker's exam all I had to provide was 40 hours of classroom education.  There is a significant and un acknowledged discrepancy in the competence of real estate agents.  When one understands the limited amount of experience that is required to be considered an "Expert in Real Estate" as apposed to virtually any other profession , especially when such large amounts of money is concerned, it becomes clear the real estate industry is largely un regulated.  While there are many laws regarding real estate, if you look closely you will find that they are written mostly by NAR to benefit the Brokers, not to protect the clients.

Because it is so easy to become a real estate agent it opens to the floodgates to every Tom, Dick and Harry who presume to make the easy money.  There is little cash investment as required my most businesses, and the old saying, "Its not what you know, but who you know" become paramount.

The agent is a Expert, the loan officer is an Expert, the appraiser is an Expert, the pest inspector is an Expert, even the lowly home inspecter is considered an Expert: but what about the client who is surrounded by experts?  Can he be held to the same standard as the experts who guided him through the purchase process?

For any agent to say they do not have an undivided responsiblity for the current real estate downturn is pathetic.  To blame the clients is akin to blaming my kids for following my advice.

Brad Deal

Lenn, I'm curious how many of your transactions over the last 36 months were done with an exotic loan?  Numerous I bet, if you are being honest.  Where would you be, where would the market be if the free-for-all had never occurred?  Would you have been willing to sell or list fewer homes if it meant not participating with sub-prime lending.  Not accepting any responsibility (blame) is like blaming the food or the cook when someone overeats and becomes fat.  The entire industry from the realtor to the ultimate investor simply overate!   This time all were pigs, yet not we complain when we are put on a controlled diet.